Contractor News

IR35, Do You Believe the Hype?

Nov 07, 2012

When it comes to being anxious or concerned about something, the best move often isn’t researching it on the internet. Much like when one gets a headache or stubs their toe, the internet could convince anyone that they are undergoing the beginnings or a terminal illness or life threatening disease. HMRC have a tendency to strike fear into even the hardiest of business folk, and recently, contractors have been exposed to some staggering statistics and scary figures that possibly they shouldn’t have. False information can be devastating unless quickly rectified, and with figures relating to IR35 inquiries recently being above and beyond the truth, we aim to put certain rumours to rest.

IR35 Advice

A small number of supposed leading tax advisors are being accused of greatly exaggerating the threat of IR35, expressing to its members that the sheer number of investigations is far higher than it truthfully is.

Published in a newsletter sent out by The Professional Contractors Group (PCG), which aims to point contractors in the right direction regarding tax inquiries, a ‘trusted’ advisor stated that it is widely believed that around 2,000 IR35 enquiries have been launched since May of this year although having absolutely no means to back up or legitimise such a statement. Such a ludicrous comment has of course been greatly denied by HMRC, a spokesman stating, “Unfortunately the PCG has been misinformed and this figure is not correct.”

Speaking to Seb Maley, IR35 expert and Associate Director at Qdos Contractor, he sheds some light on the true future of HMRC and the real plans of IR35. ‘What everyone needs to be aware of is that HMRC are putting a lot of resources into the policing of IR35 going forward, so there will be a sharp increase in the number of enquiries. They have created three teams with 12 officers each, who are tasked solely with carrying out IR35 enquiries. Each officer could probably undertake around 50 cases in a year, which means we could potentially see close to 2,000 new IR35 inspections a year. Compared to recent years this is a huge amount and will be real cause for concern for contractors.’

IR35 Investigations

This shows how correct speculation hints up to 2,000 IR35 related investigations per year, not within the space of 5 months as was mentioned by PCG. Despite these slightly sensationalised figures however, the real thing that contractors must be aware of, according to IR35 expert Kate Cottrell, is that “there is without doubt a big increase in cases.”

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Qdos Contractor is a trading style of Qdos Broker & Underwriting Services Ltd, a registered company in England and Wales with registered company number 06012716 and registered offices at Unit D, Troon Way Business Centre, Leicester, LE4 9HA.